1. Field of Invention
This invention relates to a method and system for facilitating a purchase process, and more specifically, to a computer implemented method and system for facilitating a purchase process.
2. Description of Related Art
Various web-based business-to-business selling and buying processes have been developed. In one example, vendors have an on-line storefront as its main business or an extension of a “brick and mortar” establishment. These vendors post their products available for sale on-line and provide the terms of sale, including the price, and customers place purchase orders to purchase such products if interested and accept the vendors' terms of sale. These vendors do not negotiate with their customers on-line, and the products available for purchase by the customers are limited to those products posted on-line by the vendors.
There are also on-line services which help vendors and customers locate each other. A customer locates a vendor or vice versa on-line through such service, but the purchase transaction takes place off-line. These services can be industry specific and charge a monthly service fee for the users. An example of such service is www.Telecomfinders.com. This service allows customers to locate vendors of new, refurbished, and used telecommunications products.
There are other on-line services which help customers and vendors locate each other and allow them to transact business on-line. For example, some of these services provide an on-line auction. The auction items are posted by the vendors, and the vendors dictate the quantity, condition and minimum price that they are willing to accept. The vendors then sell the auction items to the highest bidders. In this setting, the customers do not have the flexibility to customize their purchase offers by requesting a particular product, quantity or price based on the customers' specific needs. The customers' only choices are to submit a bid for an item or not and, if a customer is submitting a bid, the purchase price that it is willing to pay. An example of such service is eBay.
There are still other on-line services which bring vendors and customers together and permit an on-line transaction through a reverse-auction process. In this process, the customer, rather than the vendors, defines what product the customer wishes to purchase, along with the price it is willing to pay, and the vendors essentially bid to sell to the customer once the service provider forwards the purchase offer information to the vendors. An example of such services is the Name Your Own Price™ feature of Priceline.com.
Before the wide use of the internet, business transactions between vendors and customers typically involved negotiations as to the purchase terms, which could take a long time for an agreement to be consummated and for the transaction to take place. With the introduction of the internet, including on-line reverse auction process, business transactions have become much more efficient. Nevertheless, none of the existing on-line reverse auction processes is ideal for a distributor in business-to-business electronic commerce (“B-to-B E-Commerce”) to run a virtual company without any inventory. Distributors are entities that purchase products from manufacturers or other vendors and subsequently resell them to other customers. The customers can be end users, distributors, dealers, or interconnect. Distributors take title to the products they purchase. Distributors are not merely facilitators of transactions between the vendors and the customers.
Distributors typically purchase a wide variety of products from vendors and resell them to customers at a margin. Distributors provide value by using their knowledge of the relevant market. Distributors know what products are offered by which vendors, the vendor prices, product availability, and other terms and conditions of transactions. Distributors also know their customers' needs, the customers' applications, and prices the customers are willing to pay. For example, a distributor may be able to purchase excess inventory from a vendor at a price lower than the market price or buy products at a volume discount and resell them to customers at substantially higher margin. A distributor's ability to make profit depends entirely on its access to such information. However, traditionally, a distributor must purchase the products from the vendors first, and until the distributor is able to resell them to customers, the distributor must carry the cost of inventory and risk of loss. In addition, the market conditions may change and the distributor may not be able to resell the products at the higher margin as previously expected. Therefore, it would be useful for a distributor to be able to operate its business as a virtual entity without any inventory and to purchase the products from the vendors only after the distributor has lined up its own customers for the products to eliminate these risks. It would also be useful to provide a more efficient market, where information concerning all available products are readily available to the customers.
A distributor in a B-to-B E-Commerce market for industrial assets has a unique opportunity to make money. Industrial assets are fairly expensive equipment and products that organizations need to operate. Examples of industrial assets are telecommunications, aviation, heavy equipment and medical systems, devices, and parts. In the marketplace, there are excess or idle inventory and refurbished or used industrial assets available that vendors are willing to sell at less than standard market rates. Also, such industrial assets can have different value to different vendors, which leads to significant incongruity in the market. For example, one vendor may be the manufacturer with excess inventory of a particular Central Office equipment, where the list price for this equipment is $7000. Although this vendor wants to get rid of the inventory to avoid the cost of carrying this inventory, the vendor knows that eventually he would be able to sell the product to a customer and does not wish to dilute the market. Therefore, this vendor may be willing to sell the equipment for $5000. Another vendor may be an end user customer who purchased excess inventory of such equipment. This vendor has no need for the excess inventory which has been paid for and has no access to customers who are in need of such equipment. Therefore, this vendor may be willing to sell the equipment at a significantly lower price of $3000. At the same time, there may be a customer in need of such equipment, who may be looking for a bargain, and is willing to pay $6000 for it, knowing that the market rate is $7000. The distributor who has access to this information and a relationship with both the customer and the two vendors has an opportunity to make a profit. The distributor has a choice between buying from the first vendor and reselling to the customer to make a profit of $2000, or buying from the second vendor and reselling to the customer to make a profit of $3000. Obviously, the distributor would buy from the second vendor. Therefore, having access to such information is critical to the success of such distributor.
In addition, this distributor typically faces sophisticated customers who know exactly what products they want and under what terms and conditions they want to purchase those products. For example, the customer may be in need of one specific Central Office equipment from a particular vendor that is of a specific model and revision. The customer may be looking for a used one to save money but wants installation and a 90 day warranty period. As in an on-line reverse auction process, once the distributor receives this purchase order from the customer, the distributor then has to try to find the product so that the distributor can accept the purchase order. It would be useful for such distributor to have access to up-to-date information concerning various industrial assets available for sale, including their description and prices at which the vendors are willing to sell those products, and in particular a database which collects the information that the distributor needs in a form that is convenient to the distributor. Having access to up-to-date information of products available for sale and a system and method to permit a distributor to purchase a product on-line from a vendor immediately prior to accepting the purchase order from a customer placed through an on-line reverse auction process would enhance the distributor in a B-to-B market to efficiently maximize profit.